* Deal expected to close by end 2013
* Thai Life among nation's top three life insurers
* Deal is fourth Japanese financial sector deal in SE Asiain 2013
By Taiga Uranaka and Denny Thomas
TOKYO/HONG KONG, July 26 (Reuters) - Meiji Yasuda LifeInsurance Co has agreed to pay about $700 million to buy a 15percent stake Thai Life Insurance Co, underscoring the risingappetite of Japanese companies for deals in the rapidlyexpanding economies of Southeast.
Meiji Yasuda's purchase will make it the fourth financialservices acquisition by a Japanese firm in Southeast Asia thisyear, bringing the year-to-date total value of Japanese M&Adeals in the region to about $6.6 billion.
Rising personal income in Southeast Asia is giving, for thefirst time in many cases, individuals and families the abilityto afford insurance. That new demand has boosted stock pricesand corporate valuations, culminating in a spate of M&Atransactions.
To tap into that growth, cashed-up Japanese insurers andbanks have turned into aggressive buyers of Southeast Asianfinancial services companies as they battle sluggish growth intheir home market.
Anna Tipping, a partner at law firm Norton Rose Fulbright,said the strong cash positions of Japanese companies and slowergrowth in the home market is encouraging them to pay top dollarfor deals.
"It doesn't take much of a return on a new investment forthe return to look very attractive in contrast to what the moneyis earning at home," Tipping added.
"This has meant that the Japanese can offer much higherpurchase prices than the prices able to be offered by Westernplayer who need a return on equity upwards of 15 percent to makethe investment worthwhile," she added.
DEAL FLOWS
Earlier this month, Japan's biggest lender, Mitsubishi UFJFinancial Group (MUFG) agreed to pay $5.6 billion for acontrolling stake in Thailand's Bank of Ayudhya. InMay, Sumitomo Mitsui Financial Group agreed to acquirea $1.5 billion stake in Indonesia's BTPN.
Other insurance M&A deals expected in the region include PTBank Negara Indonesia's planned sale of an up to 40percent of its life insurance unit, a deal estimated at around$800 million. BNP Paribas is handling the sale.
Meiji and Thai Life announced the deal in separatestatements on Friday without disclosing the deal's value. Aseparate source told Reuters that Meiji has agreed to pay about$700 million for the stake, confirming a Reuters report fromlast month.
Meiji Yasuda, Japan's second-largest life insurer by premiumincome after Nippon Life Insurance Co, beat SumitomoLife Insurance Co to win the auction that alsoattracted private equity firms Carlyle Group LP, KKR & Co and CVC Capital Partners.
Thai Life, controlled by the Thailand's Chaiyawan family, isamong the nation's top three life insurers, having earned 12.4billion baht ($398.65 million) premiums in 2012, up 40 percentfrom last year.
The deal is expected to close by the end of the year.
Barclays advised Thai Life on the deal, Thai Lifesaid in a statement. J.P. Morgan advised Meiji, sourcespreviously told Reuters.
Barclays (BARC)